India’s annual food inflation nudges up to 16.37 percent

New Delhi, Oct 15 (IANS) India’s annual food inflation moved up a bit to 16.37 percent for the week ended Oct 2 compared to 16.24 percent the previous week, increasing the pressure on the Reserve Bank of India to continue with its view on tightening key interest rates.

The annual inflation rate for the primary articles group, was almost unchanged, logging an 18.54 percent rise during the week under review, against 18.53 percent recorded in the week ended Sep 25, official data released Friday showed.

The index for fuels also moved up to 11.14 percent for the week ended Oct 2 compared to 10.73 percent during the week.

The barometer for food prices has been hovering at higher levels for the past few weeks, rising steadily since Aug 14, when it was at 10.05 percent. In just over a month, it went up by 6.4 percentage points.

The still-high food prices will again strengthen the case for the Reserve Bank of India to tinker with the monetary policy to tame prices. The policy review comes up Nov 2.

The RBI had in September hiked its short-term borrowing and lending rates by 50 basis points and 25 basis points respectively.

“Food prices, in particular, are now being driven by some structural imbalances between demand and supply, as increasingly affluent consumers diversify their dietary patterns away from cereals and towards protein sources,” said Subir Gokarn, deputy governor, RBI.

The RBI will, however, find increasing interest rates very difficult if it goes by the recently release industrial output data. India’s industrial production in August grew at a much slower rate of 5.6 percent, compared to 15.2 percent in the previous month.

All this while the RBI has been citing robust industrial output as an indicator of the economy resurging, post the global economic slowdown.

The following are the rise and fall in prices of some of the main commodities that form the sub-index for food articles over the past 52 weeks: